PhD Student testimonial

Jonathan Harris

Chief Technical Officer, ET Index Research

Could you tell us about your background and what you are doing today?

In the final year of my science degree I became fascinated with the mechanics of the stock market. This was the beginning of my path towards finance. Since then I have worked for a few banks and proprietary trading firms, and completed my Master in Financial Mathematics at Stanford. Today I'm Head of Research at a firm called ET Index Research that helps investors construct strategies that incorporate environmental metrics. We have found that the benefits of utilising this information are compelling, both in terms of helping to manage risk and increase returns.

Why go for doctoral studies at this stage of your career and how did you choose this particular programme?

At the time I applied to EDHEC I was working on an interesting research project for a bank which involved building a global, multi-asset class correlation model. I thought that if I'm doing original research already, why not get a PhD with it? I was also interested in getting an academic opinion on my work and to see if there were non-proprietary contributions I could publish. The executive track of the PhD programme at EDHEC seemed like an almost-perfect for this.

Now that we've started ET Index Research, the programme also works really well as it allows me to spend most of my time growing my business. However, as my research relates directly to my company, it fits in very naturally.

You presented your first working paper at the end of March on the Nice campus in front of faculty and programme participants; could you please introduce the topic and explain how this research is relevant for your organisation.

My topic is whether or not the market is currently pricing in environmental risks. For example, if increasing global temperatures are increasing the risk of losses due to extreme weather events in the future, then you might expect this to be observable in (decreasing) stock prices today. There are a couple of academic studies that suggest this is the case. And therefore that increasing environmental risk is acting as a global drag on asset returns. This is important to ET Index Research as we help investors design strategies to navigate these increasing risks (and opportunities). With my research at EDHEC, I hope to examine the pricing of environmental risk in greater detail and to build on the interesting results that have already been obtained.

You are at the end of the second year of the programme; have you gained specific insights so far?

I've confirmed the result that temperature risk seems to be priced, and shown that this holds out-of-sample, which was not done before. In addition, I've studied other environmental risks beyond temperature and found some interesting positive, and negative, results. I look forward to publishing these results more widely later this year.

Also, what I've found useful in the programme so far is that both the professors and students have a diverse range of research interests. This makes it essential to communicate your research clearly and concisely so that researchers from different backgrounds can appreciate it. This is a life-long skill and the programme offers a friendly environment in which to refine it. And the immediate payoff is that once you've shared your ideas, there is a diverse range of researchers ready to offer you inspiring ideas that you might not have received from a more narrowly focused group.

Have there been “a-ha” moments over the course of the first year?

What I found particularly rewarding about the first year was the way we covered finance from many different angles. A key part of this was Corporate Finance. I hadn't realised how many interesting and fundamental research questions there are in this area. At ET Index Research we believe that it is important for investors to consider environmental risks. But it is important for corporate managers to incorporate environmental information as well. Thanks to our review of corporate finance research, I'm now fascinated by the implications that growing environmental risks have for manager behaviour and how this might impact returns.

Have you been enriched by the diversity of background of your fellow classmates?

Definitely. My classmates come from a diverse range of organisations including hedge funds, investment banks, and central banks. As someone in an entrepreneurial venture myself, I've found it particularly interesting to talk with classmates who have founded their own firms and to swap stories about building organisations.

What is, according to you, the main challenge of the programme?

To get the most out of the programme, I think that time management is key. We all have very busy jobs. But any time we are able to devote to EDHEC is valuable. Whether from interactions with the professors, classmates, independent research or reviewing the elective courses online.


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